Feds Paid $75M Lac-Megantic Settlement To Victims To Avoid Lawsuits

OTTAWA — The federal government quietly spent $75 million to settle with victims and creditors affected by the Lac-Megantic rail disaster — a contribution that also shielded it from lawsuits related to the deadly crash.

Former transport minister Lisa Raitt said the deal, which involved 24 other defendants who settled, was under negotiation before her Conservatives lost the October election to the Liberals.

The Liberals have refused to reveal how much the government gave to the $460-million settlement fund, even though at least two parties accused of wrongdoing in the deadly Quebec derailment disclosed their contributions.

But in a recent interview Raitt said the amount was public.

Former transport minister Lisa Raitt said the government's main goal behind the settlement was to speed up the process. (Photo: CP)

She said it was included in Transport Canada's supplementary estimates as well as in its quarterly financial report under "out-of-court settlement." The amount listed is $75 million.

Last week, Transport Minister Marc Garneau said the figure was "classified" when asked how much taxpayer money the government set aside for the settlement.

Garneau also reiterated Ottawa's denial — under both the Liberals and the Tories — that it had any legal responsibility for the 2013 oil-train accident that killed 47 people and levelled part of Lac-Megantic.

"We don't acknowledge that we had any responsibility; however, we did want to make a contribution because of the impact of this terrible tragedy in Lac-Megantic," Garneau said last week.

Federal Transport Minister Marc Garneau said the government did not have any legal responsibility for the Lac-Megantic disaster. (Photo: CP)

Raitt agreed that the government's main goal behind the settlement was to speed up the process.

"The motivation was simple: this was an opportunity to get money to the victims for wrongful death in a shorter period of time through the U.S. bankruptcy proceedings as opposed to a long, drawn-out, litigious court case," Raitt said in a recent interview.

The government's decision to settle may have also been made to avoid the cost of fighting the allegations in court. It would have faced numerous lawsuits related to the derailment on both sides of the border, said the U.S.-based bankruptcy trustee for the company at the centre of the crash — Montreal, Maine & Atlantic Railway.

Robert Keach has also said that, contractually speaking, the arrangement explicitly stated the settling parties were not acknowledging any liability with their contributions.

"We don't believe we are liable and it's not an admission of liability."—Former transport minister Lisa Raitt

The Transportation Safety Board's 2014 report on the crash said Transport Canada failed to recognize that the railway had urgent safety problems and was not following the rules. It also said the department failed to audit safety procedures at MM&A and didn't conduct enough inspections.

Raitt responded to the TSB report at the time by saying the government's role was to put the rules in place. The companies, the Conservative minister added, were expected to follow those regulations — something she said MM&A did not do.

In the recent interview, Raitt reiterated the position that the rules weren't respected.

"We don't believe we are liable and it's not an admission of liability," said Raitt, who added she would have publicly disclosed the government's settlement contribution.

Irving Oil has announced it had contributed $75 million to the fund. The train was transporting crude oil to Irving's refinery in Saint John, N.B.

World Fuel Services Corp., the U.S. company that owned the oil aboard the train, announced a few months later that it provided US$110 million toward the settlement.

An aerial view of a fire in the town of Lac-Megantic is seen from a Sûreté du Québec helicopter Saturday, July 6, 2014 following a train derailment the sparked several explosions in Lac Megantic, Quebec.

This aerial photo shows a fire in the town of Lac-Megantic as seen from a Sûreté du Québec helicopter Saturday, July 6, 2013 following a train derailment that sparked several explosions in Lac Megantic, Quebec.

A levelled building is seen in the foreground the day after a train derailed causing explosions of railway cars carrying crude oil Sunday, July 7, 2013 in Lac Megantic, Que.

Prime Minister Stepen Harperwaves to people as he visits the site Sunday, July 7, 2013 in Lac Megantic, Quebec, where a runaway train derailed Saturday. Tanker cars carrying oil exploded after the derailment and destroyed the business district in Lac Megantic.

Firefighters douse a blaze after a freight train loaded with oil derailed in Lac Megantic in Canada's Quebec province on June 6, 2013, sparking explosions that engulfed about 30 buildings in fire. At least one person has been killed.

Smoke rises in the background as Quebec Premier Pauline Marois speaks to reporters after a freight train loaded with oil derailed in Lac Megantic in Canada's Quebec province on June 6, 2013, sparking explosions that engulfed about 30 buildings in fire. At least one person has been killed.

Residents watch rising smoke after a freight train loaded with oil derailed in Lac Megantic in Canada's Quebec province on June 6, 2013, sparking explosions that engulfed about 30 buildings in fire. At least one person has been killed.

Local residents watch as smoke rises from railway cars that were carrying crude oil after derailing in downtown Lac Megantic, Que., Saturday, July 6, 2013.

Smoke rises from railway cars that were carrying crude oil after derailing in downtown Lac Megantic, Quebec, Canada, Saturday, July 6, 2013. The derailment sparked several explosions and forced the evacuation of up to 1,000 people.

Smoke rises from railway cars that were carrying crude oil after derailing in downtown Lac Megantic, Quebec, Canada, Saturday, July 6, 2013. The derailment sparked several explosions and forced the evacuation of up to 1,000 people.